Industry pleased with RFS waiver request denial

By Holly Jessen | November 16, 2012

The wait is over. The U.S. EPA announced Nov. 16 that it would not waive the renewable fuel standard (RFS), as had been officially requested in mid-August. The EPA had been considering the request for more than 90 days following its submission.

The biofuel industry responded swiftly and appreciatively. The logic-based ruling to maintain the RFS would protect America’s energy security and support progress in the efforts to commercialize advanced biofuels production, said the Biotechnology Industry Organization. Brent Erickson, executive vice president of BIO’s industrial and environmental section, pointed to studies completed at Purdue University, Iowa State University and the University of Missouri’s Food and Agricultural Policy Research Institute, which concluded that a RFS waiver would not undo the economic harm caused by the drought. It would have, however, had a negative effect on investments in the advanced biofuels arena. “Renewable fuels are a significant contributor to our nation's economy and energy security, creating jobs and directly reducing reliance on imported oil,” he said. “This decision allows BIO member companies to continue to deliver innovative technologies to the market to expand our domestic production of biofuels, including fuels from agricultural residues, municipal solid waste, algae and purpose grown energy crops.”

DuPont, a member of Fuels America, a coalition of renewable fuels stakeholders, said it was pleased. The EPA has demonstrated it is committed to reducing U.S. dependence on foreign oil through renewable fuels production, said Jan Koninckx, global business director for Biofuels at DuPont. The drought, not the RFS, is the cause of the current but temporary situation, something that was reflected in USDA and EPA’s careful analysis. “While we empathize with both livestock and ethanol producers that are struggling with higher corn prices, we are also confident that farmers will continue to expand corn production, and DuPont and others will continue to commercialize advanced biofuels—to serve both our feed and renewable fuels needs,” she said.

There is a lot at stake for the U.S. economy and the RFS is needed due to its ability to generate jobs and private investment, said Adam Monroe, President of Novozymes North America. The company and others have invested more than $1 billion to commercialize advanced biofuels, in a large part due to the RFS. “We appreciate the administration’s decision to deny the waiver request based on the data—and are pleased the United States will continue becoming less dependent on foreign oil with domestic, renewable fuel for its cars and trucks,” he said.

The American Coalition for Ethanol also weighed in on the news. “Despite millions of dollars spent by Big Oil and Big Food to shamelessly attack American-made ethanol, it comes as no surprise EPA denied the requests to waive the RFS because the facts are on our side,” said Brian Jennings, ACE executive vice president, in a prepared statement. “EPA considered the flexibility built-into the RFS, precedent established in 2008, and data which proved waiving the RFS wouldn’t remedy the harm of the drought in making the right decision.” Jennings also pointed to more than 130 unique comments submitted to the EPA by ACE members, calling the comments submitted by ethanol supporters a factor in the decision.

Growth Energy said it was welcome news applauding the EPA for not allowing a key piece of the U.S. energy policy to get altered due to political pressure. He added that it had long said the market is working and that the conditions caused by the drought didn’t meet the threshold requirements for modifying the RFS. “Today’s decision confirms what we knew all along—the petitioners were wrong in their belief that the RFS caused the economic harm,” said Tom Buis CEO of Growth Energy. “I commend the administration’s efforts to carefully review the facts and data in this matter. Their findings have echoed the comments of Growth Energy and we are pleased that the most successful energy policy enacted in the last forty years will not be modified.”

It was the right decision, said the Renewable Fuels Association, which thanked EPA for its thoughtful analysis of the facts, rather than emotions and panic. “The RFS is working as designed,” said Bob Dinneen, president and CEO. “The flexibility that is built into the RFS allows the marketplace to ration demand, not the government. Indeed, the ethanol industry has responded to the market by reducing output by approximately 12 percent. Other users of corn have responded to a lesser degree.”

It is in the best interest of both U.S. agriculture and American consumers to maintain the RFS, he added. It has helped the nation make strides toward energy independence, a cleaner environment, create jobs and bring down the price of gasoline at the pump. “Moving forward, we need a more constructive dialog with livestock and poultry groups about the real causes of high feed costs and the impacts on retail food prices,” he said.

Jeff Lautt, CEO of Poet LLC, called it a sound decision. “As studies have shown, a waiver would have likely had little to no impact on commodities prices in the aftermath of the recent drought,” he said in a prepared statement. “This effort was nothing more than the latest attempt by renewable fuel opponents to undermine policy that has helped make America stronger.”

The industry can now move forward with greater confidence, investing in new technologies to increase efficiency and commercialize cellulosic ethanol. “Poet-DSM Advanced Biofuels is moving forward with construction of the joint venture’s first commercial cellulosic biofuels plant that will use corn cobs, leaves, husk and some stalk to produce renewable fuel,” he said. “Long term, there are ambitious plans for expansion of this technology to more plants in the Poet network and to other companies through licensing agreements. By maintaining the integrity of the Renewable Fuel Standard, those expansion plans are much more feasible.”

Brooke Coleman, executive director of the Advanced Ethanol Council commended the EPA for the decision. “Waiving the RFS would have done little if anything to reduce grain prices, but would have hurt consumers at the pump and undercut investment in advanced biofuels,” he said. Congress was right to protect the RFS from specious and politically-motivated waiver arguments, and to include in the program explicit flexibility provisions that allow the standard to adjust to changing market conditions.” He also predicted that there would be more stalking horses put forth against the RFS but said this was a step in the right direction to put the 2012 waiver request behind the industry.